What to expect when you are exchanging: How to complete your property purchase and pick up the keys to your new home

Getting your property purchase finalised can be a stressful experience as you wait around for lawyers to finalise the deal and money to come into your account from the bank.

The exchange and completion stage is the final hurdle to getting onto the property ladder and makes your transaction official.

But there are still steps to follow to ensure the process runs smoothly.

Completion: Picking up the keys is the final phase of your property purchase

How do I exchange contracts on a house?

There is not much a buyer has to do during the exchange process except appoint solicitors and make sure the process runs smoothly.

The exchange and completion stage is managed by solicitors and conveyancers acting on behalf of the buyer and seller.

They will put the property transaction in writing to make sure the price is agreed and it is clear what is included in the purchase such as the size of the property and whether certain furniture items are included or excluded.

The contract will set out who the buyer and seller are and how much the property will be purchased or sold for. It will also include a date for when the sale will complete and when the property will belong to the buyer.

Once terms have been agreed, the contracts will be exchanged, at which point both sides of the deal are legally bound to go ahead with it on the terms agreed and a completion date will be provided. The new owner of the property will also be added at the Land Registry.

When the time comes to exchange contracts, the buyer must put down a deposit, typically this is 10 per cent of the purchase price. If they pull out of the deal they forfeit their deposit, if the seller pulls out then the buyer can sue them for compensation.

Who insures the property between exchange and completion?

The buyer will almost certainly be responsible for the buildings insurance for the period between exchange and completion, but you should make sure the contracts state who has to arrange the cover.

This period can be anything from a day, weeks or a couple of months depending on other buyers and sellers in the chain.

Richard Cohen, solicitor for MyLawyer, explains: ‘If the purchaser is required to insure then it is very important to have cover immediately after exchange as destruction of the property will not usually allow the purchaser to end the contract unless specifically bargained for.

‘It is a good idea to negotiate a right to end the contract if the property is destroyed or substantially damaged as it will be very difficult to arrange a mortgage on a property that has been substantially damaged.’

Even if the seller has agreed to insure between exchange and completion, you should ask for a right to end the contract in the case of substantial damage and ask for the insurer to be informed of an upcoming purchase, Mr Cohen says.

How long will it take to exchange contracts?

It can take between seven and 28 days between exchange and completion, according to lobby group the Homeowner’s Alliance.

It is sometimes possible to exchange on the same day but the HomeOwners’ Alliances warns that while this speeds up the process, it can be risky as you are vulnerable to the seller making last minute demands and are also relying on all the money transferring on time.

Robin King, director of estate agents Move with Us, says you can speed up the process by appointing solicitors or conveyancers early on the buying process.

Research by estate agents Move with Us says people who instruct a solicitor when they first list their property for sale move on average up to 11 days faster

Mr King explains: ‘Being legally prepared early puts buyers in a good position by being able to stand out from the competition and demonstrate that they are a serious, motivated and reliable contender.’

Is it too late to change my mind?

Once contracts have been signed it is very difficult for a buyer to back out.

Once you have exchanged contracts you will be in a legally binding contract to buy the property.

If you do not you will lose your deposit and you can be sued. The seller has to sell or you demand your deposit back and sue them.

Mr Cohen adds: ‘If the buyer fails to complete the seller may serve a notice on the buyer requiring them to complete as well as pay the sellers additional legal costs and any damages for delay which will include interest on the unpaid purchase price.

‘If the buyer still fails to complete the seller may cancel the contract and keep the deposit. The buyer may still be liable for any difference in the ultimate sale price the buyer agreed to pay and the price the seller may achieve selling to another buyer. In some circumstances it may be possible for the buyer to apply for a return of part or all of the deposit but in most circumstances the buyer would forfeit his/her deposit.’

What happens once I complete?

Your solicitor will have finalised a completion date and all the legal paperwork will be finished for you to be the owner on the relevant date.

On the day you will then be able to pick the keys up from the estate agent or direct from the seller.There will still be stamp duty to pay the taxman based on the price of your property.

This starts at 1 per cent for transactions worth £125,000 to £250,000, 3 per cent for £250,000 to £500,000, 4 per cent for £500,00 to £1million and 5 per cent for £1million to £2million and 7 per cent for over £2million.

If you are selling a property with an estate agent there will be a fee to pay, usually between 1 and 3 per cent of the sale price, before VAT.

All you have to do now is move your stuff in and make sure you have transferred any bills, informed people and organisations of your change of address and arranged for council tax.

You will also have to pay moving costs to get your belongings into your new property. If you use a removal man or rent a van yourself, you could spend around £300 to £600.

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